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Everyone’s Having Cloudy Thoughts!

The economic turmoil, globalization and the changes in the New World Order means that organizations cannot afford to waste time, human and financial resources on processes that can rapidly and easily be automated and managed. Businesses need to transform themselves into agile operations capable of turning a constantly changing business environment into opportunities. Process innovation and speed of change are the key opportunities for competitive differentiation moving forwards. Traditional IT solutions are finding themselves under stress as the struggle to meet the demands of the business leaders and customers they serve.

Unfortunately the IT organization, responsible for facilitating changes demanded by the business, often falls short of being able to do just that. Many studies and surveys show that changes to IT infrastructure and applications are fraught with complexity, costing much more and taking much longer than initially anticipated. It is not uncommon for an IT organization to take 5 or more years to make significant enterprise-wide changes; this pace just doesn’t support the business initiatives required in today’s business climate.

So it is inevitable the Businesses leaders are looking for new ways to use computing power to meet their needs and fortuitously two trends are beginning coalesce to provide a new way of delivering applications as services; These two are:

1. The Cloud2. Process Centric Situational Applications.

The Cloud.

The entire field of Computing is fast becoming a “cloud”—a collection of disembodied services accessible from anywhere and detached from the underlying hardware.

There will be many ways in which the cloud will change businesses and the economy, most of them hard to predict, but one theme is already emerging. Businesses are becoming more like the technology itself: more adaptable, more interwoven and more specialized. These developments may not be new, but the advent of cloud computing will speed them up.A recent analysis of Cloud computing in the Economist stated that there were a plethora of data centers worldwide and estimated that 7,000 data centers existed in America alone. Most of these data centers were one-off designs that had grown over the years. Many surveys show that these data centers are highly inefficient. According to a study by McKinsey, a consultancy, and the Uptime Institute, a think-tank, on average only 6% of server capacity is used. Nearly 30% are no longer in use at all and many organizations are unaware of which application is running on which server. What a waste and think of the impact on the environment!

According to IDC a quarter of corporate data centers in America have run out of space for more servers. For others cooling has become a big constraint and often utilities cannot provide the extra power needed for an expansion. IDC believed that many data centers will be consolidated and overhauled. Hewlett-Packard used to have 85 data centers with 19,000 IT workers worldwide, but expected to cut this down to six facilities in America with just 8,000 employees by the end of this year, reducing its IT budget from 4% to 2% of revenue. HP is not alone and the Perfect Storm will speed up this trend as companies strive to become more efficient.

This Cloud of computing resources will not only effect the number of data centers and the number of people employed in them – it will have profound implications for the organization. On one level the cloud will be a huge collection of electronic services based on standards. Many web-based services are built to be integrated into existing business processes. IT systems will permit organizations to become more modular and flexible and this will lead to further specialization. In the Cloud it will become even easier to outsource business processes, or at least those parts of them where firms do not enjoy a competitive advantage. This also means that companies will rely more on services provided by others.

Furthermore, there will be not just one cloud but a number of different sorts: private ones and public ones, which themselves will divide into general-purpose and specialized ones. People are already using the term “intercloud” to mean a federation of all kinds of clouds, in the same way that the internet is a network of networks. And all of those clouds will be full of applications and services.

There will be many ways in which the cloud will change businesses and the economy, most of them hard to predict, but one theme is already emerging. In the current economic environment businesses will have to become more like the technology itself: more adaptable, more interwoven and more specialized.

Situational Application Provisioning

Situational Application Provisioning is a very different proposition from what we think of as applications it therefore represents a very different opportunity and is a mechanism whereby a user can put together an “application” based around normal working patterns, using readily available services.

This means that is possible to handle any sort of business problem usually tackled by enterprise solutions by being able to leverage the capability to associate virtually any number of web services within the context of an application. Process Provisioning is effectively an application generator within a process and is inherently more flexible, easier to provide, easier to manage and easier to use than traditional “ERP” type products.

But What Do We Mean By “Situational Applications”?

According to Wikipedia, a situational application is software created for a small group of users with specific needs. The application typically has a short life span, and is often created within the group where it is used, sometimes by the users themselves. As the requirements of a small team using the application change, the situational application often also continues to evolve to accommodate these changes. Significant changes in requirements may lead to an abandonment of the situational application altogether – in some cases it is just easier to develop a new one than to evolve the one in use.According to IBM situational applications describes applications built to address a particular situation, problem, or challenge. The development life cycle of these types of applications is quite different from the traditional IT-developed. SAs are usually built by power users using short, iterative development life cycles that are measured in days or weeks, not months or years. As the requirements change, the SA often continues to evolve to accommodate these changes. Significant changes in requirements may lead to an abandonment of the used application altogether; in some cases it's just easier to develop a new one than to update the one in use.

The idea of end-user computing in the enterprise is not new. Development of applications by amateur programmers using IBM Lotus® Notes®, Microsoft® Excel spreadsheets in conjunction with Microsoft Access, or other tools is widespread. What's new in this mix is the impressive growth of community-based computing coupled with an overall increase in computer skills, the introduction of new technologies, and an increased need for business agility.

Why is This Approach Different?

Most software companies think on-demand applications (SaaS) are a replacement for traditional business software. They couldn’t be more wrong. Sure, these software-as-a-service (SaaS) applications are sold as a service and paid for per-transaction, but they are developed, sold and delivered in the same manner as traditional licensed software.

The most successful software-as-a-service (SaaS) companies do not think of themselves as software companies selling software on-demand, but as Web companies with business users accessing a service over the Internet. These companies realize that to effectively start and grow a SaaS business, they need to act more like a consumer-based Web company than a traditional enterprise software company.

Why do we need process technology to deliver Situational Applications?

There are two clear reasons for needing process technology to underpin the provision of these applications:

1. Rapid Innovation – Ra-In CloudsThe cloud is, as discussed above, the ideal mechanism for utilizing extensive computing power – be that storage or specific applications such as SalesForce.com. As it stands it saves you money. It doesn’t help you innovate – the cloud does not enable you to simply build applications to meet the needs – process technology, in its broadest sense, lets you do this in a easy and flexible way – the processes orchestrate the interaction and integration of services.

2. ComplianceSituational Applications can be very disruptive and lead to anarchy and a breakdown of corporate governance and compliance. Think of all those Excel spreadsheets – situational Applications – that are used to run most businesses – no control no compliance no ownership. Process enablement of these types of applications will provide ownership, control and auditablity – making the compliant with the corporate demands without stifling innovation and change.

The Application Target

The initial thrust for the cloud is data center and “standard” applications such as SalesForce.com and Google Apps. But this is just the start – the cloud has significantly more potential than simply being able to provide specialized applications and flexible data storage.

Gartner defines cloud computing as a style of computing where massively scalable IT-related capabilities are provided “as a service” using Internet technologies to multiple external customers. “During the past 15 years, a continuing trend toward IT industrialization has grown in popularity as IT services delivered via hardware, software and people are becoming repeatable and usable by a wide range of customers and service providers,” said Daryl Plummer, managing vice president and Gartner Fellow. “This is due, in part to the commoditization and standardization of technologies, in part to virtualization and the rise of service-oriented software architectures, and most importantly, to the dramatic growth in popularity of the Internet.”

Plummer said that taken together, these three major trends constitute the basis of a discontinuity that will create a new opportunity to shape the relationship between those who use IT services and those who sell them.As we have seen, Business Process management has a key role in enabling the cloud to deliver applications – more importantly situational applications, in a new, flexible and cost effective way – and we call this Application Service Provisioning. The cloud then has the potential radically change the way the small to medium sized business market operates and at the same time disrupt the enterprise software market making it redundant and obsolete – almost overnight.

The Cloud as a Delivery Mechanism

According to Gartner, The types of IT services that can be provided through a cloud are wide-reaching. And include:

Storage services to store data and documents without having to continually grow farms of storage networks and servers.

SaaS such as CRM services through multitenant shared facilities so clients can manage their customers without buying software.

The advent of the cloud means that the focus has moved up from the infrastructure implementations to mechanisms that access to the capabilities provided. This means that the ultimate measure of success will be how the services are consumed and whether that leads to new business opportunities.

Gartner predicts that the impact of cloud computing on IT vendors will be huge. Established vendors have a great presence in traditional software markets, and as new Web 2.0 and cloud business models evolve and expand outside of consumer markets, a great deal could change. “The vendors are at very different levels of maturity,” said David Cearley, vice president and Gartner Fellow. “The consumer-focused vendors are the most mature in delivering what Gartner calls a ‘cloud/Web platform’ from technology and community perspectives, but the business-focused vendors have rich business services and, at times, are very adept at selling business services.”

How do business take advantage of low cost, on demand, computing power to drive their business growth, make them more efficient and better able to compete in a global market economy?

This is where SaaS enabled BPM platforms comes into play by providing an environment where business users and developers can work together to build new applications from scratch or by mashing up services that are widely and readily available in the cloud. These applications will almost certainly start out as situational or ad-hoc applications. These applications are important to the company but are not ones that are strategic line of business requirements. These applications are ideal for process centric deployment in the cloud. Why is this so?

Despite the fact that these Situational Applications are not strategic they do have to be properly controlled. That means they have to be compliant, auditable, recorded and controlled. Furthermore there is every possibility that they will have to be fully integrated into some “on premise” applications or even outsourced processes – therefore they need to show proper and full corporate governance. For most, deploying these applications in the cloud is too radical unless they can be properly controlled and managed. Furthermore even though they do not involve large IT investment or involvement they cannot be allowed to flaunt corporate standards – building situational applications based on proper process control in the cloud is by far and away the only way to do it.

Fig 1. Typical Cloud/On Premise set up

The above diagram illustrates the promise of the cloud in two areas; Service/App Cloud and the Infrastructure Elasticity Cloud. At the Service /App Cloud the promise is that the Cloud will deliver Business Driven Value, a subscription model based on either “Pay as you Use” or through subsidy and the ability to outsource costs and or troubles. At the Infrastructure Cloud the promise is that the Cloud will deliver Capacity as needed, a usage model based on “Pay as you Grow” and the ability to outsource costs and or troubles.

In addition the organization will require access to On-premise Enterprise applications such as SAP, Oracle etc and these will be accessed through both Private and Public Business Application Clouds. The combination of the high availability of Cloud infrastructure at a low cost and innovative Cloud services means that the organization needs an Assembly and Orchestration layer in the Cloud to fully deliver useful business advantages.

Benefits of this approach to the business users:

No significant IT investment

Low start up cost

Addresses annoying needs in a controlled way

All Operational expenditure – no capital outlay

Solutions are compliant with corporate standards of governance

Easy to change

Pay per use – no idle investments laying around

Provides real and tangible cloud benefit without the risk

Application Provisioning in the Cloud

The following situational applications might be considered to be the minimum requirement for true office administration type services that one might expect Application Provisioning to deliver.

Help Desk Management

Project Management

Travel Approval

Requirements Management

Expense Reporting

Payment Requests

Budget Approval

New Hire Setup

Training

What Do We Do Differently?

In order to truly leverage the power of the SaaS model, we need to reconsider the SaaS BPM proposition – we shouldn’t think of this as BPM as a Service, more a platform as a service, a redefined application server if you will.SaaS applications that emulate consumer Web sites in the way they are developed and sold tend to achieve much more success than those that emulate traditional enterprise software. Therefore we need to put the application in the hands of the consumer not the technician.

Software companies that cast a blind eye to the Web-based model, whether originating online, migrating to SaaS or taking a hybrid approach, will find that the ever-winding road to success will be a frustrating excursion on the road to nowhere.